The choice of where to bank is one of the most important decisions in any consumer’s life. The right choice can lead to sound economic decisions and services, and the wrong choice can result in inconvenience, high fees, poor service, and dissatisfaction.
There remains a fierce competition to attract and retain banking customers.
To remain competitive, community financial institutions must continually balance service offerings and profits with the needs of consumers. At the same time, the industry has seen a radical transformation. The pandemic lockdowns spurred an already-in-motion move away from traditional branch services to online and mobile services. This means that everyday services on debit, credit cards, and new and evolving payments systems are the biggest areas of competition.
The Opportunity to Innovate
The rise of digital services is creating opportunities for credit unions. Studies have shown that many generations, especially Millennials and Gen Z, are more budget-focused and want better customer service. Credit unions typically have lower fees and pride themselves on their customer service.
During this period of change, credit unions can take advantage of the opportunity to attract and keep new customers—and win in the current evolving marketplace. While there are various paths credit unions can take in their journey, below are a few things they can consider.
For one, credit unions can develop robust card services for credit and debit cards. Payments and card services have evolved over the past decade and their presence in most consumer lives is ubiquitous. This means that options to boost card programs, rewards, and services are now available to most, if not all, credit unions.
Credit unions are also embracing the movement to mobile and online banking by leaning on the heritage of customer service. Chatbots and elaborate phone trees aren’t going away, and credit unions can use them when necessary, but it’s vital that customers are able to connect with a live person. This option can be potentially expensive—especially when compared to a chatbot—but banks’ reliance on bots and automated service provides has resulted in customer frustration. Therefore, it would be wise for credit unions to stay personal and remove as much friction as possible from the customer experience.
Another factor to consider is personalizing credit card reward programs. For example, one reward option could be to let cardholders donate to local non-profits. Credit unions can work with local businesses to offer discounts on a rotating basis, and this would not only help them support local businesses, but those same businesses might jump at the chance to offer credit union cardholders a discount.
Finally, it’s important to always offer both online and in-branch educational programs which speak to the benefits and potential drawbacks of having and using a credit card. Knowledge—particularly financial education that teaches consumers on the many ways they can live a financially responsible lifestyle—is a great way for credit unions to separate themselves from competitors.
Evolving with the Times
The retail banking world is changing. Consolidation at the national level, creating larger and larger banks, opens a door for credit unions to gain market share. By taking advantage of their position as a local neighborhood resource—one where bank employees know their customers and their customers’ habits and needs—credit unions will grow.
There’s no doubt that the changing landscape could signal the start of a golden age of credit unions. They can use their partnerships with local businesses and other stakeholders as a way to go above and beyond and build relationships with their members.
As credit unions are mainly praised for their ability to provide exceptional customer service, they also offer lower fees, better interest rates, and services that provide education on financial literacy. And credit unions continue to be successful as they lean further into what credit unions do best: member service.